The ratios used in evaluating a company's liquidity and short-term debt paying ability that complement each other are the Entry field with incorrect answer now contains modified data Accounts receivable turnover ratio and the Entry field with correct answer current ratio.

Question

Business

Ayla

16 June, 09:56

The ratios used in evaluating a company's liquidity and short-term debt paying ability that complement each other are the Entry field with incorrect answer now contains modified data Accounts receivable turnover ratio and the Entry field with correct answer current ratio.

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Carl Mcneil · Answer 1

Current Ratio

Explanation:

Current ratio is the proportion of current assets to current liabilities. It is one of the liquidity ratios that measures the capability of an organization to meet it short term obligations which is represented by current liabilities such as accounts payable and short term loans.

These liabilities are met with current assets such as cash and accounts receivables. Ideal current ratio is 2:1 that implies that the organization has enough currents assets to meet its short term liabilities as well as maintain adequate liquidity.